You may have heard the term ‘furloughing’ for the first time during the Coronavirus outbreak.
Yet, it’s likely that you’ve now placed one or more of your employees onto the Government Job Retention scheme (or if not yet, you have plans to do so imminently).
The Government announced it would reimburse 80% of usual wage costs for eligible employees for an initial term of three months*.
That is great news for your business. It means you don’t have to go down the redundancy route. And you will have core workers ready for the recovery phase.
But are you confident your business is complying with employment law?
Katie Ash, Head of Employment Law at Banner Jones Solicitors explains: “It is important that local businesses don’t fall foul of employment law when furloughing staff. “
“We’ve heard quite a few examples of where businesses have not checked contracts or have not received consent from the staff member. And there are some businesses, which have allowed staff members to continue working while furloughed.”
“We worry that some businesses could end up with future claims against them. Please seek advice.”
Here are five things that Katie recommends you check:
1. Is your business eligible?
Katie says “Any employer can claim provided that they:
- – Had created and shared a PAYE payroll scheme on or before 28 February 2020;
- – Have enrolled for PAYE online; and
- – Have a UK bank account.
This includes businesses, charities, recruitment agencies with agency workers paid through PAYE, and public authorities. Individuals who employ people and pay them through payroll can also claim, for example those who employ nannies.”
2. Do you understand how to implement the scheme?
Katie advises: “An employer will need to identify affected employees (those who are not required to work “by reason of circumstances as a result of coronavirus or coronavirus disease”) as ‘furloughed’ workers and inform their employees of this.
The most up to date version of the guidance states that even with the right to furlough in the employment contract, employers need to obtain their employees’ agreement to become furloughed workers. You must also be able to demonstrate this agreement.
Not only is it best practice to document any correspondence and/or action relating to furlough leave, it is essential that you document your employee’s agreement to become a furloughed worker in writing. HMRC have also said that records about furlough must be kept for at least 5 years, and the actual agreement regarding furlough leave will be vital in supporting your claim for support under the CJRS.
Once employees have been identified as furloughed workers, employers need to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. It is understood that the government will have the portal set up by 20th April 2020 with the first payments being made to employers by 30th April 2020.
Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they are written to confirming their furloughed status.”
3. Do you know what your employees can do whilst furloughed (including working elsewhere)?
“Whilst on furlough leave, an employee must not undertake any work that generates revenue for your business or provides a service to you,” says Katie. “However, they can carry out training or do volunteer work, as long as it is in line with Public Health guidelines.
“They can still receive furlough pay and go and work for another employer – unless they are contractually prohibited from doing so.”
4. Have you provided the correct notification to your employees who have been placed on furlough leave?
Katie advises: “You must notify employees in writing. It is not adequate to only notify them verbally. You must also keep a record of this written notice and it must be kept for 5 years. You also need to have the employee’s written agreement to be placed on furlough leave unless you have a contractual right to place them on furlough leave.
5. Are you following your responsibilities regarding the employment rights of your employees while furloughed?
“An employee’s rights will not change during furlough leave,” says Katie. They will remain an employee of the business and will continue to accrue continuity of service and holiday pay.”
Banner Jones solicitors has provided more detailed advice on furloughing staff at https://www.bannerjones.co.uk/uploads/resource/file/84/Banner_Jones_-_Coronavirus_Business_Support_Guide_-_20th_April_2020.pdf
*The guidance continues to change, and the latest Government documents for the scheme can be found at https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.
